Bristol-Myers Squibb (BMS) will acquire cardiovascular disease drug developer Cardioxyl for up to $2.075 billion, in a deal that strengthens the buyer’s pipeline in one of its key therapeutic areas with a Phase II candidate for acute decompensated heart failure (ADHF), the companies said today.

CXL-1427, Cardioxyl’s lead asset in Phase II studies, is a second- generation nitroxyl (HNO) donor (prodrug) designed to work by improving heart muscle and vascular function through the release of nitroxyl.

Preclinical and early clinical data has shown that CXL-1427 improves how the heart muscle contracts and relaxes without increasing heart rate or the demand for oxygen, according to BMS and Cardioxyl. A Phase I trial was completed last year, in which CXL-1427 was shown to be well-tolerated following 24- and 48-hour continuous intravenous infusions.

The companies say CXL-1427 is an advance over current therapies for ADHF, which improve heart muscle function but produce an increase in heart rate and/or oxygen consumption, and are associated with increased risks for ischemia, arrhythmias and increased mortality.

“The acquisition of Cardioxyl strengthens Bristol-Myers Squibb’s heart failure pipeline with a Phase II asset that has the potential to change the course of the disease rather than simply treating the symptoms,” Francis Cuss, evp and CSO for BMS, said in a statement.

Added Cardioxyl president and CEO Christopher A. Kroeger, M.D.: “Heart failure is an important and under-served therapeutic area and we believe Bristol-Myers Squibb is the optimal partner to bring new therapeutic options to the patients who need them.”

Cardioxyl’s pipeline also includes two preclinical compounds: An oral product for congestive heart failure; and an IV and oral product for pulmonary arterial hypertension. The company, profiled by GEN in 2010, was formed to commercialize research into beneficial cardiovascular effects of nitroxyl by its scientific founders from Johns Hopkins University and their colleagues.

BMS’ pipeline as of June 30, the latest update on its website, includes three cardiovascular small-molecule compounds: A Phase II IKur inhibitor, a Phase I Factor Xia inhibitor, and a Phase I PAR4 antagonist.

Cardiovascular is one of BMS’ eight core therapeutic areas, along with fibrotic diseases, genetically defined diseases, immune-oncology, immunoscience, metabolics, oncology, and virology. BMS’ largest-selling marketed cardiology drug, Eliquis® (apixaban), generated $1.258 billion in worldwide revenues during the first nine months of this year, up 155% from $493 million in January-September 2014.

BMS agreed to shell out up to $300 million in upfront and near-term milestone payments, as well as up to $1.775 billion in payments tied to achieving development, regulatory and sales milestones.

Privately held Cardioxyl has been financed by life science venture investors, including New Enterprise Associates, OrbiMed, Aurora Funds and Osage University Partners. OrbiMed led a $28 million series B financing for the company in 2012.

The boards of both companies have approved the deal, which BMS said is expected to reduce its 2015 GAAP earnings per share by approximately $0.12, with “minimal” dilution to non-GAAP EPS in both 2015 and 2016, the companies said.

The deal is expected to close during the fourth quarter of 2015, subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act.

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